According to Adrian Lowcock, an investment director at Architas, said: 'Whilst we believe inflation looked to have peaked, any drop is likely to be gradual.

'With the global economy continuing to grow and indeed the UK only growing slightly slower there is a growing pressure on the Bank of England to raise interest rates soon. Something the Governor, Mark Carney, has indicated could happen.

'Investors should ensure their portfolios are well protected against mild inflation and for a world of slightly higher interest rates.

'Typically, equities have been a good place to be in this environment.'

15:25

Looking ahead to a March rate hike by the US Federal Reserve

Is a March interest rate rise in the US now a given?

Futures market now has the probability of a March rate hike at 100%, as if there was ever any doubt. But there is only a 15% probability that we get 4 hikes this year.https://t.co/wyfH3UcCAS

'Consumer spending entered the New Year on a downbeat note, falling for the eighth time in the past nine months, as Britons continued to cut back on spending.

'Clothing, furniture and household goods bore the brunt of consumers’ caution yet again, while spending on the British high street in general fell sharply as the traditional January sales failed to bring shoppers out in numbers this year.

'It wasn’t all doom and gloom in January though. Britons tackled the January blues with evenings out and early holiday bookings, giving a boost to hotels, restaurants and bars. Spending on jewellery, beauty products and trips to hair salons recorded strong growth too, as consumers continued to prefer small treats over big tickets items.'

12:55

Spending dips yet again

Household spending continued to decline in real terms at the start of 2018, according to the latest Visa UK Consumer Spending Index data.

Overall expenditure fell by -1.2% year-on-year in January, following a -1.0% drop at the end of last year.

The latest reduction was the quickest seen since last October, and indicates that spending has now fallen in eight of the past nine months.

#Germany's Dax trades lower in tandem w/ US Futures as investors remain nervous about wages, inflation, deficits, and yields and the relationship between yields and stock multiples. pic.twitter.com/ptki4psT56

Yesterday's recovery for US stocks already looks like it has faltered as pre-market trading put Dow Jones futures more than 100 points lower.

Dow futures hinted at a -0.69% slide down 147 points to 24,437, while S&P 500 futures trading suggested it would drop 0.58% to 2,642.

11:42

Resolution Foundation highlights continued pay squeeze

Most importantly this means that the pay squeeze continues. Prices are rising faster than wages, and although we expect inflation to subside, real wages are unlikely to rise much before well into 2018 pic.twitter.com/TF8mms7DJr

'High inflation continues to put strain on finances, persistently holding steady at 3%. Following last week’s falling share prices, today’s figures will further dampen spending ability, particularly for those who are invested in the stock market.

'Despite edging closer towards another rate hike as suggested in last week’s MPC meeting, today’s figures means a continuation of the record lows. Even if the Bank of England is to raise interest rates, there are misconceptions as to when consumers will actually see the results, particularly as some banks are failing to pass this on.

'That said, rates would need to be hiked significantly to make a real noticeable difference to consumers.'

11:00

Pound rises

The pound has risen to $1.391 after the ONS inflation data this morning, up from £1.38 earlier today.

'Wage growth is currently running at 2.5%, so the spending power of pay packets is still falling in real terms. We’ll be looking for an increase when the ONS reports next week. The Bank of England has said it expects pay growth to accelerate in 2018, and this is yet another reason higher interest rates are on the table.

'It seems domestically driven inflation could seamlessly take over from the sterling-related price rises we’ve seen since the Brexit vote. If this is the case, some tightening of monetary policy looks increasingly appropriate.

'That said, structural factors like an ageing demographic and the rise of disruptive technologies continue to exert downward pressure on the inflation rate, and I don’t think the Bank of England will have to be too extreme in its actions to keep a lid on the situation.'

10:49

Meanwhile, in cryptocurrencies...

Neil Wilson of ETX Capital says Bitcoin is turning lower.

Its value has held steady for a number of days now and it was quiet while the rest of the world's attention turned to global stock market falls but has fallen more than 2% over the last 24 hours.

Chris Williamson, chief business economist at IHS Markit, said the key dilemma for policy makers is that economic growth appears to have faltered in early 2018.

'PMI survey data registered the slowest growth of business activity for one-and-a-half years in January.

'Data from mortgage lender Halifax have also shown house prices falling for a second successive month in January while an index of consumer spending from Visa showed a 1.2% annual decline as shoppers struggled with the combination of high prices and sluggish wage growth,' he said.

'While the stickiness of inflation will make for itchy trigger figures among rate setters at the Bank of England, the signs of the economy faltering suggest there’s a risk of higher interest rate exacerbating a nascent slowdown.

'The door remains open for a May interest rate hike, but the Bank of England will likely need to see indicators of the economy’s health improve to be sufficiently reassured that the economy is ready for another rise in borrowing costs.'

Alistair Wilson, head of retail platform strategy at Zurich, said: 'The overall rise in inflation has been persistent. Adding fuel to the fire is the continuing stagnation of wages over the same period, with increases remaining well below the rate of inflation and putting further strain on household disposable incomes.

'After last week's falling share prices, high inflation will put a second dent in the spending power of pensioners whose pots are invested in the stock market.

'Last week’s MPC meeting would suggest another rate rise is just around the corner. While a significant increase is unlikely, savers will still need to take a hands-on approach to their finances if they are to avoid any future shocks.'

10:02

Pressure finally starting to come off food prices

After rising strongly since the middle of 2016, food price inflation now appears to be slowing https://t.co/CQ8CQhZBel

The ONS said motor fuel pushed down the rate of inflation in January as they rose by less than they did a year ago.

However, 'recreational and cultural' goods and services were the main things pushing inflation higher as prices for tickets to places such as zoos and gardens fell at a slower rate.

09:45

12-month CPI rate also unchanged

The CPI 12-month rate was 3% in January - unchanged from December 2017 but marginally down on the 3.1% it hit in late 2017.

09:37

NEW: Inflation steady

UK inflation was 2.7% in January this year according to data from the Office for National Statistics.

The rate, which measures increases in the prices of goods, was unchanged on December 2017.

It should be good news for shoppers who have suffered with stagnant wages and rising prices in the post-Brexit era if the rate falls - however it remains above the Bank of England's 2% target.

09:13

This isn't the recovery we were looking for

With the FTSE faltering and European markets in the red this morning analyst Neil Wilson, of ETX Capital, says this doesn't look like a recovery for stocks.

‘European markets are failing to follow through on yesterday’s bounce and a decent performance overnight in Asia, with the main bourses in the red this morning. Although the FTSE 100 is marginally in the green as TUI jumps on rising sales,’ he said.

‘Wall Street is looking to build on a big two-day rally but there is as yet no real conviction behind this, as evidenced by the softer performance in European indices this morning.

‘A lack of volume yesterday on Wall Street suggests there is not a huge amount of interest in this recovery just yet and may be a signal that this is not a reversal in a secondary downtrend.’

09:01

European markets down

The Eurostoxx 600 - one of the biggest indicies on the continent - is down this morning, failing to follow Wall Street up and recover from last week's troubles.

The German DAX is also down in the red today - and the French CAC is also falling.

08:56

Bumpy day ahead for the FTSE?

It's been through a number of ups and downs since the opening of trading already, with the FTSE back in the green after dipping earlier.

08:36

Shares in TUI biggest riser on the FTSE so far

TUI travel agents, formerly Thomson, has posted a solid summer season of bookings for 2018 - sending it share price up 2% in early trading.

Its shares are at 1,623p.

The company said overall bookings for summer 2018 have started well, with the UK "broadly in line" with the prior year - down 1% - and average selling prices up 3%.

The FTSE 100-listed firm logged an 8.1% rise in revenues to 3.5 billion euros (£3.1 billion), up from just shy of 3.3 billion euros (£2.9 billion) a year earlier.

08:25

Today's agenda: UK inflation report

After resisting a hike in interest rates this week, the Bank of England will be watching to see how fresh inflation data due out at 9.30 this morning will play out.

Inflation hit a peak of 3.1% at the end of 2017, before falling to 3%.

The bank’s own target for inflation is 2%.

08:23

FTSE wobbles

After shooting up at opening, the FTSE 100 stumbled into the red in the first half hour of trading this morning. Dashing hopes that the market recovery was strengthening, however it is likely the index could be set for a volatile day.

Do you want to automatically post your MailOnline comments to your Facebook Timeline?

Your comment will be posted to MailOnline as usual

We will automatically post your comment and a link to the news story to your Facebook timeline at the same time it is posted on MailOnline. To do this we will link your MailOnline account with your Facebook account. We’ll ask you to confirm this for your first post to Facebook.

You can choose on each post whether you would like it to be posted to Facebook. Your details from Facebook will be used to provide you with tailored content, marketing and ads in line with our Privacy Policy.